You will now be required to pay VAT on your Zoom Subscription from August 1, 2021. It joins Facebook and YouTube, which is already charging VAT on supplies to consumers in Kenya.
Zoom has its headquarters in San Jose, United States and is registered for VAT in Kenya as a non-resident electronic services supplier. The firm is required to collect and remit VAT on supplies made to non-VAT registered consumers in Kenya,
Zoom video communications announced on Monday that it will begin charging Kenyan VAT on its supply to Kenyan clients on or shortly after August 1. This will primarily affect businesses, as they are the ones who pay for Zoom services.
With the onset of the COVID-19 pandemic and the shift worldwide to work from home, Zoom has been one of the most widely used 3-in-1 meeting platforms in the world with HD video conferencing, mobility and web meetings.
“Like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations.” Zoom.
According to Zoom, the application of these taxes to businesses that engage in online operations is a complicated and ever-changing area.
It stated that it intends to assess such developments, as well as the nature and scope of its operations in various countries, and that based on such regular reviews, it will begin imposing taxes where appropriate.
In most cases, VAT is invoiced and collected from the client by the supplier who sells the products or services. The provider then reports and remits the VAT collected to the tax authorities.
Zoom to collect VAT from non-registered individuals.
When a non-resident supplier (such as Zoom) provides imported taxable services (including electronic services), the responsibility to collect and remit VAT is determined by whether or not the Kenyan customer is registered for VAT.
For customers who are not VAT registered in Kenya, the App will generate a VAT invoice that shows the tax at the appropriate rate.
Clients who are VAT registered in Kenya must supply Zoom with their Personal Identification Number (PIN) as well as a certification indicating they are VAT registered in Kenya.
If one is VAT registered, no VAT will be charged on the supply made to them via this video app; nonetheless, under the “reverse charge” method, one will be obliged to self-assess for the VAT. If a person is not registered for VAT in Kenya, Zoom will collect VAT on the supplies they receive.
Zoom will charge Kenyan VAT on its bills if the customer’s ‘Sold To’ location is in Kenya and the customer has not provided a valid PIN and a declaration that they are registered for VAT in Kenya.
Zoom will charge VAT on supplies made to a client in Kenya who does not provide a PIN or who does submit a PIN but is not registered for VAT in Kenya. Businesses will be charged for using Zoom.
After the government slapped a 16 percent VAT on the service, the video conferencing app claims it was compelled to pass the cost on to its users.
While many Zoom users use the free basic plan, many larger companies, including non-profits and government agencies, pay between KSh15,000 ($150) and KSh25,000 ($240) for licenses.
Many businesses have increased their presence in Kenya’s digital marketplace, causing the Kenya Revenue Authority (KRA) to enact the Digital Service Tax, which is now set at 1.5 percent of gross transaction value ( exclusive of VAT).
On January 2, 2021, a tax on digital market suppliers went into effect in the country.